Call to cut renewables target rejected

Australia's Climate Change Authority has rejected calls by some of the country's biggest energy companies to scale back the national 20 per cent renewable energy target, saying it should be left largely untouched.

In its first major release since being set up in July, the authority says significantly altering the target — mandating 20 per cent of Australia's electricity generation should come from renewable energy sources — would hurt investor confidence.

Significant industry players, including Origin Energy, Energy Australia and the Business Council of Australia, proposed the target be reduced as they said it was set to be overshot, resulting in higher industry costs than necessary.

Modelling commissioned by the authority finds that at current rates 25 per cent of Australia's electricity will be generated by renewable energy sources by 2020-21 as a result of the target, falling energy demand, and the rapid uptake of rooftop solar.

But the authority says adjusting the target would threaten investor confidence in renewable energy and pursuing lower carbon emissions, especially with political uncertainty clouding the future of Australia's carbon price scheme, which the Coalition has promised to dump.

The authority also finds adjusting the target downwards would have no significant impact on reducing average household electricity bills, though it would reduce industry cost by $4.4 billion to 2030. Lowering the target to reflect changed market conditions would also result in an extra 94 million tonnes of greenhouse gas emissions coming from the electricity sector by 2030.

The recommendations are included in a discussion paper released this morning as part of a wider review of the renewable energy target by the authority due to be finished in December.

Authority chairman and former Reserve Bank Governor Bernie Fraser said this morning "the challenge is to strike a reasonable balance between encouraging further investment in renewable energy — leading to ongoing reductions in greenhouse gas emissions — and the costs to the scheme to households and business consumers of electricity".

The renewable energy target is divided into two parts, one for large-scale renewables such as wind farms and another for small-scale generations such as rooftop solar panels. The large-scale component has a cap for the amount of generation to be supplied under the target, while the small-scale component is uncapped.

While the authority again recommends leaving the the small-renewable energy component largely untouched, it does propose that federal government incentives to encourage the uptake of rooftop solar panels could be reduced in the future to help contain rising power costs.

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